Budget 2021 key points
Cost of packet of cigarettes will rise to €14; Pandemic Unemployment Payment extended although top rate of €350 not restored
13 October 2020 | 0
Key points for retailers from this year’s Budget 2021 announcement:
- The cost of a packet of cigarettes will rise to €14, with excise duty going up by 50 cents.
- On climate change, carbon tax will rise by €7.50 from €26 to €33.50 per tonne of CO2. Legislation will be provided to increase the tax each year by €7.50 up to 2029 and by €6.50 in 2030 to reach €100 per tonne.
- A reduced VAT rate for the hospitality sector from 13.5% to 9% will operate from 1 November until December 2021.
- To support small and medium sized businesses, debt warehousing provisions will be extended for a period of a year with no interest. A €30 million fund will be administered through the Ireland Strategic Investment Fund.
- A new variant of the Employment Wage Subsidy Scheme will begin after the present scheme ends next spring.
- On tourism, an additional €55 million has been announced for a “tourism business support scheme and €5 million for tourism product development”.
- The 12.5% corporation tax rate remains in place.
- To ensure that the salary of a full-time worker on minimum wage stays outside the top rate of USC, the ceiling of the second USC rate band will be increased to €20,484 to €20,687, providing a “modest benefit” to workers whose income is above that amount.
- The weekly threshold for the higher rate of employers’ PRSI will go from €394 to €398, so that there is no incentive to reduce working hours for a full-time minimum wage worker.
- Government plans to face the “daunting” Covid-19 threat with a total budgetary package of almost €18 billion. Some €3.4 billion of this will be for a recovery fund. Capital expenditure will increase to €10 billion.
- Some €340 million of voted expenditure will be spent on Brexit supports in 2021.
- The Department of Finance is forecasting a loss of 320,000 jobs in 2020. Around 155,000 are expected to be recovered next year. Budget 2021 forecasts a deficit of €20.5 billion but there is a “high level of uncertainty” about future forecasts.
- Minister Donohoe said he plans to fully utilise the Rainy Day Fund of €1.5 billion.